2017 Q1 Global CFO Signals


2018 Q2 Global CFO Signals™

Twin worries: Trade and talent

In the eight surveys included in this quarterly round-up, many of the responding CFOs voice upbeat outlooks. But the threat of a trade war, and concerns over talent, have many CFOs on edge.

How does CFO sentiment in Q2 2018 break down?

A synopsis by region:

  • Australia: Solid on outlook; positive on risk
  • Belgium: Labor shortage risks restrain optimism
  • Brazil: Positive both on corporate and country outlooks
  • India: Optimism amid uncertainty and regulatory change
  • Japan: Trouble abroad exacerbates domestic concerns
  • North America: Strong optimism, but trade policy and geopolitics loom large
  • Russia: Thriving labor market despite cost control and uncertainty

Back to top

2018 Q2 Global CFO Signals™

Twin worries: Trade and talent

An abundance of positive economic evidence—from strong consumer demand to favorable monetary policy—helped sustain optimism among some CFOs in the second quarter of 2018. But two issues—trade and talent—seem to be sounding an ominous drum beat and sending mixed signals in the Q2 2018 edition of Global CFO Signals.

On the positive front, many of the CFOs in the eight surveys included in this quarterly round-up, voice upbeat outlooks about their organizations’ financial prospects, growth metrics, and, countries’ economic outlooks. In North America, for example, net optimism moderated from last quarter’s survey-high +54, but remains relatively strong at +39, and expectations for revenue, earnings, and hiring all rose. In Australia, 77 percent of CFOs are optimistic about their companies’ financial prospects—a sentiment that is reflected in local job growth and investment activity. And in India, 94 percent of CFOs are optimistic about that country’s outlook over the next two-to-three years.

But it is the threat of a trade war that has many CFOs on edge. In Australia, for example, more than 50 percent of CFOs believe a trade war will negatively impact their business in the short-term, whereas in the medium-term, this rises to 70 percent. Among Japanese CFOs, the threat of a global trade war easily topped their list of external concerns (93 percent). And while CFOs in the United Kingdom are understandably worried about the long-term effects of Brexit, they also rank “greater protectionism” as an escalating risk.

“The trade tensions between the US and China have continued to evolve,” observes Sitao Xu, chief economist, Deloitte China, “leading to many scenarios, some good, some bad.” He adds that businesses obviously do not want a protracted trade war, but often have little choice except to adopt a wait-and-see attitude—particularly when reevaluating supply chains. What is clear, however, is that “businesses are very worried about these tensions,” says Patricia Buckley, managing director, Economic Policy and Analysis, Deloitte Services LP (United States).

Compounding matters is the escalation of long-running concerns over talent. For Belgian CFOs, scarce labor is their greatest concern and has been since the second quarter of 2017. Japanese finance chiefs cite labor shortages at the top of their list of domestic concerns (67 percent), and US CFOs name talent as their top internal risk. Likewise, in the United Kingdom, which is feeling the effects of the lowest unemployment rate in 43 years, 44 percent of CFOs reported that recruitment difficulties or skills shortages have risen in the last three months.

Even more pressing is the fear is that these twin concerns—trade and talent—could have a chilling effect on business investment. Indeed, a report recently published by the European Investment Bank (EIB), states that the “limited availability of people with the right skills impedes the investment activity of more than 70 percent of European firms.”1 Going forward, says Michael Grampp, chief economist, Deloitte Switzerland, the shortfall means companies may need to rethink their workforce composition and competencies. “Companies realize they can’t just rely on the younger generations to fill the gaps,” he explains.

Whether these concerns are enough to dampen the current economic momentum, remains to be seen.  

Back to top

CFO Sentiment 2017 Q1

2018 Q1 CFO sentiment synopsis by region


As mentioned previously, many of the indicators in the North American report hit new survey highs. There was one very clear driver: passage of tax reform by the US Congress. In its wake, CFOs not only grew more optimistic, but their assessments of the North American economy grew even stronger, with nearly 90% of CFOs rating current conditions as good, up from 74% last quarter and a new survey high by a wide margin. CFOs also commented on tax reform head-on, expecting it to have wide-ranging implications.

“Tax reform was intended to increase companies’ domestic investment, hiring, and pay, and CFOs’ survey responses seem to indicate it will aid all of these to a very substantial extent,” observed Greg Dickinson, managing director, Deloitte LLP, who leads the North American CFO Signals survey.


There are mixed outlooks among the two countries reporting in Asia-Pacific: China and Japan. Japanese CFOs, for example, are somewhat gloomy about their companies’ financial prospects, with only 19% reporting being “very optimistic” or “more optimistic,” versus 27% in Q4 2017. On the other hand, net optimism rose significantly to +5 in China this survey from –23 in Q1 2017, reflecting a stable-to-positive outlook in that economy. With the International Monetary Fund raising the forecast for China’s economic growth at the beginning of 2018, there was an understandable upsurge in optimism among respondents amid a growing bullish market outlook.


Finally, as reported here and in the latest European CFO Survey, companies across Europe continue to signal solid optimism—albeit tempered from Q3 2017—about their business prospects. It should be noted that CFOs within the euro area showed a higher level of confidence than those outside. This is despite a series of disappointing economic data for the euro area in the past few months, indicating that although the economic recovery may have lost some momentum, a tipping point in CFO sentiment has not yet been reached. Interestingly, the only countries within the euro area where there was an increase in the net balance of optimistic CFOs are in the “periphery economies” of Ireland, Italy, and Spain—suggesting that the recovery in the euro area may have really established itself. Outside the euro area, the main outlier continues to be the United Kingdom, where a softening economic outlook and uncertainties related to Brexit may explain the expectations of CFOs.

Despite all the positive signals, there are still plenty of headwinds, including the possibility of higher deficits and inflation in the US in the wake of tax reform—which would not be a welcome spillover. “We’re expecting stronger growth this year and next year, but the big question is what happens two years from now,” says Buckley, adding that by then, CFOs might want to “dust off those recession plans just in case.” That thought may be enough to make the patient’s heart skip a beat.

Global CFO Signals: By the numbers

Risk appetite

Risk appetites remain mostly strong this quarter. In India, for example, 57 percent of CFOs are willing to take greater business risks, as companies consolidate gains from recent reforms. In Australia, 42 percent of CFOs are interested in taking on risk in the form of additional investment, supported by stronger business conditions and the possibility of tax cuts. Meanwhile, risk appetite among Belgian CFOs has slowed, although it remains positive at 41 percent. In contrast, risk appetite in the United Kingdom remains well below its long-term average, as Brexit weighs heavily on investment decisions.


Financial, economic, and political uncertainty still worries many CFOs, but to varying degrees. In Belgium, 43 percent of CFOs rate the levels of financial and economic uncertainty as above normal, up from 39 percent last quarter. In Russia, 49 percent of respondents also point to high uncertainty around the current economic and political situations, up 13-percentage points year-over-year. However, in Japan, CFOs reporting “very high” or “high” uncertainty in the business environment fell sharply this quarter from 70 percent to 44 percent. In Australia, CFOs are still willing to take on balance sheet risk, despite the fact that uncertainty has climbed 10 percent since the last survey.


Many CFOs remain bullish on their prospects. In North America, expectations for revenue (6.3 percent, the highest in nearly four years) and earnings (10.3 percent, the highest level in three years) both rose again. Some 83 percent of India’s CFOs expect revenue growth, and 70 percent of Japan’s CFOs expect earnings to rise “somewhat” or “largely.” In the United Kingdom, however, revenue expectations have dipped, with a net 17 percent expecting increases, down from 31 percent last quarter. There, some 34 percent also expect Brexit to have a negative effect on capital spending over the next three years.


Labor and skills shortages are top of mind among CFOs. For CFOs in Belgium, scarce labor is their greatest concern and has been since the second quarter of 2017. Japanese executives express similar worries, citing labor shortages at the top of domestic concerns (67 percent). Similarly, in the United Kingdom, 44 percent of CFOs report that recruitment difficulties or skills shortages have increased in the last three months. Meanwhile, North American CFOs are in a hiring mode, citing hiring expectations of 3.2 percent, a new survey high. And in Russia, 73 percent of CFOs expect salaries to increase, a 15-percentage point increase from just six months ago.

Corporate strategy

Grow with what you know seems to be the theme. Over the next year, 74 percent of Brazil’s CFOs plan to focus on boosting revenue, with 66 percent targeting organic growth. CFOs in India are also focused on growing revenue and promoting organic growth. North American CFOs reached a survey high in bias toward organic growth (67 percent) over inorganic growth (17 percent); their bias toward current geographies over new ones also increased. But defensive strategies are again on the upswing in the United Kingdom, with 47 percent of CFOs focused on cutting costs.

Interest rates

CFOs have been bracing for interest rate hikes for a while now. This quarter, in Australia, 44 percent of CFOs expect interest rates to go up, while a full 90 percent of Belgium’s CFOs predict that interest rates will rise over the next 12 months. For UK CFOs, however, interest rate expectations have fallen back from the previous quarter, with 38 percent (down from 47 percent) of CFOs expecting the Bank of England’s base rate to be 1 percent or higher in a year’s time. About two-thirds of Russian CFOs, however, believe that the Bank of Russia's key interest rates will decrease.

Back to top

Did you find this useful?